TMI Blog2014 (2) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... xygen (IP) is concerned and at the rate of 12% insofar as oxygen for industrial use is concerned. - Decided in favor of assessee. Reassessment proceedings - Held that:- We proceed with the assumption that respondents could have initiated the reassessment proceedings there being doubt regarding levying of tax on oxygen (IP) i.e. medicinal oxygen but we having already held that tax liability on oxygen (IP)/medicinal oxygen was only 8% which was rightly levied in the assessment order, the order granting permission for reassessment proceedings and the reassessment orders are unsustainable. - Writ Tax No. - 1098 of 2007 - - - Dated:- 11-2-2014 - Hon'ble Ashok Bhushan And Hon'ble Mahesh Chandra Tripathi,JJ. For the Petitioner : S. D. Singh For the Respondent : C. S. C. ORDER (Delivered by Hon'ble Ashok Bhushan, J.) The question for consideration in this writ petition is as to whether on oxygen IP (Indian Pharmacopoeia) the tax under the U.P. Trade Tax Act, 1948 is to levy under Entry "Medicine and Pharmaceutical Preparation" or under Entry "Oxygen and other gases". The facts of the case as emerge from the pleadings of the parties are; the petitioner, a partnersh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax at the rate of 8% was charged, hence the tax liability was imposed. The petitioner filed this writ petition and has prayed for quashing the orders dated 18th May, 2007 passed by the Additional Commissioner and the reassessment orders dated 13th June, 2007. We have heard Sri S.D. Singh, Senior Advocate appearing for the petitioner and Sri C.B. Tripathi, Special Counsel appearing for the State-respondents. Sri S.D. Singh, learned counsel for the petitioner submitted that assessment orders accepting the tax liability at the rate of 8% on oxygen (IP) i.e. medicinal oxygen was in accordance with the notification dated 15.1.2000 treating the oxygen (IP) as medicine and pharmaceutical preparation. He submits that liability of tax at the rate of 12% cannot be imposed under Entry 47 of the notification dated 29.1.2001 as 'oxygen and other gases'. He submits that Entry 47 covers 'oxygen and other gases' but exclude 'such other gases as are included in any other notification issued under the Uttar Pradesh Trade Tax Act, 1948'. He further submits that oxygen (IP) (medicinal oxygen) shall not be covered by Entry 47 i.e. a general entry but is covered by the Entry 'Drugs and Medicines'. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U.P. Trade Tax Act provides for rates of tax. Sub-section (1) of Section 3A is quoted below:- 3-A - Rates of tax. - (1) Except as provided in Section 3-D, the tax payable by a dealer under this Act shall be levied:-- (a) on the turnover in respect of "declared goods", at the point of sale to the consumer at the maximum rate for the time being specified in Section 15 of the Central Sales Tax Act, 1956, or where the State Government, by notification, declares any other single point or a lesser rate, at such other point or at such lesser rate ; (b) on the turnover in respect of such goods, other than the goods referred to in clause (a), at such point and at such rate, not exceeding fifty per cent, as the State Government may, by notification, declare, and different points and different I rates may be declared in respect of different goods. (c) on the turnover in respect of goods, other than those referred to in clause (a) or clause (b), at the point of sale by manufacturer or importer at the rate of ten percent." A notification dated 15th January, 2000 was issued in exercise of powers under Clause (e) of sub-section (1) of Section 3-A of the 1948 Act providing for descripti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Point of tax Rate of tax percentage 1 2 3 4 2 ..... ... ... . ..... ... ... 47 Oxygen and other gases but excluding fuel gas, natural gas and such other gases as are included in any other notification issued under the Uttar Pradesh Trade Tax Act, 1948 M or I 12.00% ..... ... ..." As noted above that point of controversy is as to whether oxygen (IP) is covered by Entry 26 of the notification dated 15th January, 2000 or by Entry 47 of the notification dated 29th January, 2001. For finding out 'medicine and pharmaceutical preparations', the provisions of the Drugs and Cosmetics Act, 1940 (hereinafter referred to as the 1940 Act) are relevant. Section 3(b) defines the word 'drug' which is to the following effect:- "3(b). "drug" includes (i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that if the Commissioner, on his own or on the basis of reasons recorded by the assessing authority, is satisfied that it is just and expedient so to do, authorises the Assessing Authority in that behalf, such assessment or re-assessment may be made after the expiration of the period aforesaid, but not after the expiration of 1[six years from the end of such year or March 31, 2002, whichever is later] notwithstanding that such assessment or re-assessment may involve a change of opinion: Provided further that the assessment or re-assessment for the assessment year 1987-88 may be made by March 31, 1993: Provided also that if the eligibility certificate granted under Section 4-A has been amended or cancelled by the Commissioner under subsection (3) of Section 4-A, the order of assessment or re-assessment may be made within one year from the date of receipt by the assessing authority of the copy of the order amending or cancelling the aforesaid certificate or by March 31, 1995, whichever is later: Provided also that the assessment or re-assessment for the assessment year 1989-90 may be made by March 31, 1995. (3) Where the notice under sub-section (1) for any assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter of the assessee remained pending before the High Court or the Supreme Court, involving a question of law, having a direct bearing on the assessment or re-assessment in question, shall be excluded in computing the period of limitation provided in this section. (7) Where in the assessment or re-assessment of a dealer for any assessment year, any Assessing Authority-- (a) has included any turnover and any superior authority or Court has, in exercise of the powers lawfully vested in it, held such turnover to relate to the assessment-- (i) of such dealer for any other assessment year, or (ii) of such dealer under the Central Sales Tax Act, 1956, or (iii) of any other dealer, whether under this Act, or under the Central Sales Tax Act, 1956; (b) has not included any turnover on the ground that it relates to assessment under the Central Sales Tax Act, 1956 and any superior authority or Court has, in exercise of the powers lawfully vested in it, held such turnover to relate to the assessment of that dealer under this Act, whether for such assessment year or any other assessment year, then nothing contained in this section limiting the time shall apply to assessment or re- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus 'oxygen and other gases' are covered by Entry 47 if they are not included in any other notification issued under the 1948 Act. The oxygen, when used as a medicine, a pharmaceutical preparation, being covered by Entry 26 of the notification dated 15.1.2000 is outside the general entry of oxygen and other gases in Entry 47. Learned counsel for the petitioner in support of his submissions, has placed reliance on several judgments of this Court and other High Courts where the issue of taxability on the medical oxygen was under consideration. The first judgment which has been relied by the learned counsel for the petitioner is in the case of Industrial gases Ltd. vs. Commissioner Sales Tax, Lucknow reported in [1968] 21 STC 124 (ALL), which is a Division Bench judgment of this Court. At the relevant time notification was issued under Section 3-A of the U.P. Sales Tax Act, 1948 where one of the Entries was 'chemical of all kind'. The issue in the aforesaid case was 'whether oxygen so prepared is a chemical liable to be taxed under Section 3A at the rate of 0-1-0 anna per rupee or it is a medicine requiring tax at a reduced rate?'. The Division Bench of this Court in the said case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hence these revision petitions. The short question for consideration is, whether the oxygen called "medicinal oxygen" falls within entry 121 of the Second Schedule ? The said entry reads as follows : "Industrial gas, such as oxygen, Thirteen per cent". acetylene, nitrogen and the like." The question in the said case was as to whether medicinal oxygen is to be covered by industrial gas etc. The Tribunal in the said case has held that since Act no where refers to 'medicinal oxygen', it would be covered by the general word 'oxygen' in entry 121. The Karnataka High Court disapproved the aforesaid view and laid down following in the said judgment:- "The Tribunal is not right in holding that, because, the Act nowhere refers to "medicinal oxygen", it would be covered by the general word "oxygen" in entry 121. This is an assumption unwarranted. In a taxing statute, charge can be attracted only be the language used; there is no scope for the supposed intention of the Legislature. In case of any doubt as to the meaning of words, the benefit of construction should go to the assessee. The burden (as observed by the Supreme Court in G. S. Pai's case ) is on the Revenue to bring in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted in paragraphs 1 and 2 which are quoted below:- "1. Whether medical oxygen and nitrous oxide can be treated as medicines for the purpose of levy of tax under the Kerala General Sales Tax Act, 1963 (for short, "the Act") is the question involved in this case. 2. The assessee is the revision-petitioner. State is the respondent. The assessment year is 1987-88. The assessee is engaged in the manufacture and sale of medical oxygen and nitrous oxide. In the assessment for the year 1987-88 the assessee contended that the said two items are liable to be assessed at the rate of 5 per cent under the Notification G.O. (Rt.) No. 242/84/TD. The assessment was originally completed by assessing "medical oxygen" at 5 per cent under the above notification and "nitrous oxide" at 6 per cent under entry No. 85 of the First Schedule to the Act as it stood at the relevant time. However, the said assessment was reopened under Section 19 of the Act on the ground that "medical oxygen" and "nitrous oxide" are liable to be assessed at higher rates. In spite of the objections taken by the assessee, the assessing authority passed a revised assessment order dated July 22, 1992 (annexure A) under which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax [1981] 47 STC 359, P.A. Thillai Chidambara Nadar v. Additional Appellate Assistant Commissioner [1985] 60 STC 80 and Chiranjit Lal Anand v. State of Assam [1985] 60 STC 89. The dictionary meaning of a word can be looked into where the word has not been statutorily defined or judicially interpreted to ascertain the meaning of a word in common parlance bearing in mind that a word is used in different senses according to its context and the court has to select the particular meaning which is relevant to the context in which it has to interpret the word. State of Orissa v. Titaghur Paper Mills Co. Ltd. AIR 1985 SC 1293. 15. There is no definition of the word "medicine" in the Act nor any judicial interpretation given to the said word was brought to our notice. Black's Law Dictionary defines the word "medicine" thus: "Medicine.--The science and art dealing with the prevention, cure and alleviation of diseases ; in a narrower sense that part of the science and art of restoring and preserving health which is the province of the physician as distinguished from the surgeon and obstetrician. Bruke v. Kansas State Osteopathic Ass'n., C.C.A. Kan, 111 F.2d 250, 253. The term is not limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -known test to be applied in interpreting the entry, which is the functional test. There is no dispute that "medical oxygen" is used for administering it on patients. Similarly, the function of "nitrous oxide" is to act as an anesthetic agent. Thus, going by the user test and the functional test, it is evident that "medical oxygen" and "nitrous oxide" are served as medicines. 17. Admittedly, "medical oxygen" and "nitrous oxide" are gases which will fall under the broad categories mentioned in entry No. 85 of the First Schedule to the Act. Here it must be noted that entry No. 85 itself says "other than those specified elsewhere in the Schedule" which would mean that if any item of gas specifically falls under any other items in the First Schedule to the Act then such gas would not fall within entry No. 85 of the First Schedule to the Act. "Medical oxygon" and "nitrous oxide" are not specifically mentioned in any other entries in the First Schedule to the Act. The contention of the Government Pleader is that the expressions "not elsewhere" provided is with reference to the petroleum products particularly entry No. 140, sub-entry (xxii) and otherwise. However, we have taken the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on S.R.O. No. 976/89 granting reduction in the rate of tax in respect of medical oxygen from 8 per cent to 6 per cent. These notifications at the most can only show that the Government entertained the view that "medical oxygen" will fall under entry No. 85 of the First Schedule to the Act. Since this view is against the assessee it cannot bind the assessee if in law "medical oxygen" in fact falls under entry No. 116 relating to medicine. Hence we are unable to agree with the view taken by the Tribunal. 20. In the view which we have already taken in the matter, we hold that "medical oxygen" and "nitrous oxide" have to be assessed under entry No. 116 of the First Schedule to the Act as it stood at the. relevant time. The assessing authority will modify the assessment by applying the rate applicable under entry No. 116 of the First Schedule to the Act in respect of "medical oxygen" and "nitrous oxide"." The Kerala High Court in the said case held that medical oxygen being medicine has to be assessed as special item falling under the entry relating to medicine i.e. Entry 116 and the same cannot be covered in the entry of gases. The above judgment supports the contention of the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oxygen, under Article 21 of the Constitution of India, it is duty of the welfare State either to exempt the tax completely or charge negligible tax because medicated oxygen gas is to be used for those human patients who are in critical condition and the gas is required to save their life. In this view of the matter, I am in full agreement with the view taken by the Allahabad High Court that if one commodity is used for different purposes, then, tax can be levied at different rates. But, here in this case, admittedly medicated oxygen is to be used for saving life of human patients and no other purpose or use is there with regard to medicated oxygen. Of course, where the industrial use of the oxygen gas is in question, then, liability of tax need be satisfied under Entry No.176 of the notification dated 22.03.2002. In respect of medicated oxygen, in my opinion, the Deputy Commissioner (Appeals), so also, learned Tax Board have rightly arrived at the finding that tax levied at 8% while treating the medicated oxygen as medicine/drug does not require any interference. Moreover, the said finding is based upon sound reasoning that the commodity is to be used for saving human life and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued by the Director of Drugs Control Board, under the provisions of Drugs and Cosmetics Act 1940 and the Rules framed thereunder and therefore, it was no longer open to the petitioner to contend that the "medical oxygen" falls under the general category of 'gas' and not a specific item of medical product. Having heard learned counsel for the respective parties and having perused the material papers and the reasons contained in the relevant entries in the Schedule as well as the definition of "drug" under the Drugs and Cosmetics Act as well as the relevant Rules framed under the said Act, we are convinced that the conclusion of the Tribunal cannot be interfered with. The definition of 'drug' under the Drugs and Cosmetics Act in the year 1991 and the Entry 95 of Schedule-I, Part-I, is concerned, it specifically states that in order to ascertain the drug one should be guided by the definition of 'drug' as it is defined in the Drugs and Cosmetics Act, 1940. The definition in the said Section reads as under: ..... Subsequently, when Entry 20-A came to be inserted in the Schedule-I, Part-C in the year 1993, the reading of the said entry shows that in effect, the definition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 1991 and Entry 25 as of the year 1993 as contended by the petitioner. We therefore, do not find merit in these Tax case revisions as well as the writ petitions and the same fail and are dismissed. No costs." Sri C.B. Tripathi, learned counsel appearing for the State-respondents, relying on the judgment of the Apex Court in the case of Dunlop India Ltd. and Madras Rubber Factory Ltd. vs. Union of India and others reported in (1976)2 SCC 241, has submitted that for interpreting the meaning of a word in taxing statute, the acceptation of a particular word by trade and its popular meaning should be accepted. It is useful to quote paragraphs 36, 37 and 38 of the said judgment which are to the following effect:- "36. We are however, unable to accept the submission. It is clear that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course. But once an article is classified and put under a distinct entry, the basis of the classification is not open to question. Technical and scientific tests offer guidance only within limits. Once the articles are in circulation and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of British India Corporation Ltd., Kanpur vs. Commissioner of Sales Tax, U.P. reported in 1987 UPTC 394, where the Full Bench has again held that words and terms not defined in statute, they have to be understood in their common parlance or as understood by traders in those articles. Again there cannot be any dispute to the proposition laid down in the said case. Another judgment relied by Sri C.B. Tripathi is in the case of State of Maharashtra vs. Bradma of India Ltd reported in 2005(2) SCC 669. In the said judgment following was laid down in paragraph 7:- "7. We are of the opinion that the High Court was wrong. Both the Tribunal and the High Court commonly enunciated the principle that a specific entry would override a general entry. In addition we would add, and as has been held in CCE Vs. Wood Craft Products Limited 1995 (3) SCC 454, 462, resort has to be had to the residuary heading only when a liberal construction by the specific heading cannot cover the goods in question. The language of Entry 97 (b) clearly shows, by use of the phrase "other than those specified elsewhere" that it is not only a residuary entry but also that electronic systems, instruments etc. may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, several factors which would be relevant are required to be gone into. The trade or commercial meaning or the end user context would, thus, be a relevant factor. 45. Submission of Mr. Venugopal that having regard to the provisions contained in Section 101 of the Indian Evidence Act, onus would be on the assessee, cannot be accepted for more than one reason. Firstly, because the provisions of the Evidence Act have no application. Secondly, because the classification adverted to by the assessee had been accepted by the revenue for more than 20 years. A different construction to an entry cannot be resorted to only because the rate of tax has been lowered. As the said classification had been accepted by the revenue for a long time, the onus would be on it to show as to why a different interpretation thereof should be resorted to particularly when no change in the statutory provision has taken place. 46. Reliance has been placed by the learned counsel on Krishna Steel Industries vs. vs Collector of Central Excise, Patna : (2004) 11 SCC 239 wherein having regard to the interpretation of Chapter Note 6, the classification had been made either under Chapter 84 or under Chapter 73 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise, Patna reported in 1998(97) E.L.T. 16, has laid down that if there is any doubt in the construction of any provision of a taxing statute, that doubt must be resolved in favour of the assessee. Sri C.B. Tripathi has also placed reliance on a judgment of the Apex Court in the case of Commissioner of Central Excise, Nagpur vs. Shree Baidyanath Ayuved Bhawan Ltd. reported in (2009)12 SCC 419. One of the products being manufactured by Baidyanath was D.M.L. (Dant Manjan Lal). An exemption notification dated 1st March, 1978 was issued by the Central Government extending exemption to "... all drugs, medicines, pharmaceuticals and drug intermediates not elsewhere specified". The Baidyanath claimed the benefit extended by Central Government and stop paying duty on the product "DML". Show cause notices were issued by the Central Excise Department. The Baidyanath resisted the notices on the ground that DML is an ayurvedic medicine. The Tribunal held that in common trade parlance, DML is neither treated nor understood as an ayurvedi medcine and hence could not be classified as such. The order of the Tribunal was challenged before the Apex Court. The Apex Court upheld the order of the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Entry 26 of the notification dated 15.1.2000 cannot be included in the general entry i.e. Entry 47 of the notification dated 29.1.2001. It is relevant to note that in Entry 47 there is an exclusion clause which excludes "such other gases as are included in any other notification issued under the Uttar Pradesh Trade Tax Act, 1948". It is further relevant to note that both the notifications i.e. notification dated 15.1.2000 and 29.1.2001 have been issued in exercise of the powers under clause (e) of sub-section (1) of Section 3-A of the Uttar Pradesh Trade Tax Act, 1948 and in exercise of power under Clause (b) of sub-section (1) of Section 3-A of the Uttar Pradesh Trade Tax Act, 1948 respectively which are still continuing and continued during the relevant period governing the assessment orders in question. In view of the foregoing discussions, we hold that tax liability on oxygen (IP) i.e. medicinal oxygen, was only 8% and the assessment orders were correctly passed levying tax liability at the rate of 8% insofar as on oxygen (IP) is concerned and at the rate of 12% insofar as oxygen for industrial use is concerned. Now the submissions raised by learned counsel for the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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